Boyuan Construction Group (TSX-V:BOY) Investor Presentation

1. Investor Presentation
January 2010
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2. Forward-Looking Statements
In addition to historical information, the statements set forth throughout this
presentation include forward-looking statements that may involve risk and
uncertainties that could cause actual results to differ materially from those in the
forward-looking statements. Such risks and uncertainties include, but are not
limited to, uncertainty of contract negotiations and payments under existing
contracts, the Company’s dependence on government contracts, changes in the
laws of the PRC that affect the Company’s operations, fluctuation and
unpredictability in foreign exchange prices, fluctuation and unpredictability of
costs related to the Company’s products and services, reduction or reversal of
the Company’s recorded revenue or profits due to “percentage of completion”
method of accounting and expenses and costs associated with the issuance of
securities. The forward-looking statements are also identified through use of the
words “believe,” “enable,” “may,” “will,” “could,” “intends,” “estimate,”
“anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,”
“continue,” and other words of similar meaning. Actual results could differ
materially from the expectations contained in forward-looking statements as a
result of several factors, including regulatory approval requirements and
competitive conditions. These and other factors that may result in differences
are discussed in greater detail in the Company’s reports and other public filings.
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3. Company Snapshot
• Boyuan is the first pure-play construction
company listed in North America
• Focused on fast-growing Yangtze River Delta,
City of Sanya, and the Shandong province
• Success driven by history of quality projects
delivered on time and budget
• Introduced unique make good provision to
investment landscape
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4. Financial Overview
US$ FY 2007 FY 2008 FY 2009 FY 2010E
Revenue $49,112,775 $56,175,070 $101,664,080 $139,800,500
Adjusted Net Income $4,665,720 $6,180,219 $9,610,867 $12,400,000
Adjusted EPS (Diluted) N/A N/A $0.39 $0.42
Adj. EPS (C$, diluted) N/A N/A $0.42 $0.45
Y/Y ATNI Growth 79% 33% 55% 30%
P/E Ratio N/A N/A 6.3x 5.8x
Net Income
$16,000,000
$12,000,000
$8,000,000
$4,000,000
$0
FY 2007 FY 2008 FY 2009 FY 2010E
Note: Adjusted net income is net income before deduction of the made good charge.
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5. Q1 2010 Financial Review
US$ Q1 2010 Q1 2009 Change
Revenue $35.0M $21.3M +64.5%
Gross Profit $5.7M $3.1M +83.8
Adjusted net $3.0M $2.0M +48.7%
income
Adjusted EPS $0.12 $0.08 50%
(diluted)
Total assets $71.8M $57.5M 24.8%
Note: Adjusted net income is net income before deduction of the made good charge.
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6. Peer Group Comparison
Company Exchange Share price* Market Cap P/E
Boyuan TSX-V $3.10 $79.79M 7.56
Aecon TSX $15.60 $851.10M 16.29
Bird TSX $34.40 $483.36M 8.27
SNC-
TSX $53.99 $8.15B 24.41
Lavalin
*At December 31, 2009
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7. Construction Industry Overview
• 62,074 construction companies in 2007.
• Industry is highly fragmented and competitive.
• Distribution of construction companies very much
like a “pyramid”.
• Technical capabilities still short of western
standards.
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8. Construction Industry Overview
• One of the key economic pillars in China.
• Experienced significant growth over the past decade. CAGR of
22% from the year 2000 to 2007.
Growth rate
24.6% 25.7%
US$ (in billions) 22.8%
20.6% 19.1% 20.3%
800 747.7
700 608.7
600 506.1
500 425.1
400 338.1
271.4
300 225.0
200
100
0
2001 2002 2003 2004 2005 2006 2007
Total Output Value of Construction
Source: China Statistical Yearbook 2008, National Bureau of Statistics of China
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9. Growth of construction Industry in China
• China will overtake the United States as the
world’s largest construction market by 2018*
• By 2018, China’s already massive construction
market will be worth almost US$2.4 trillion
represent 19.1% of global construction output.
(2008: global market is 7.5 trillion US$)**
* Source: Global Construction Perspectives & Oxford Economics
**Source: IHS Global Insight Construction Services
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10. Growth factors of Construction Industry
• China continues to be in a rapid phase of its
economic development cycle.
• Rapid rural migrations to urban centers.
• Accelerated growth of middle class.
• Stimulus Plan- US$586 billion.
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11. Boyuan’s Core Market
The Yangtze River Delta
Consists of triangle
of Shanghai,
Southern Jiangsu
Province and
Northern Zhejiang
Province
• 21% of the national economy
• Home to over 80 million people in 2007 GDP US$2 trillion
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12. Boyuan’s Secondary Market
Sanya, Hainan Island
• Major tourist destination
• 20.6 million tourists and
US$2.64 billion spent in 2008
• China’s largest “special economic
zone”
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13. Boyuan’s Latest Market
• Shandong
• One of the richest provinces in China .
GDP of US$446 billion in 2008 (2nd in
China)
• Biggest producer of cotton and wheat
• Largest deposits in petroleum and
precious metals
• Home of the two most recognized brand
names in China: Tsingtao beer and
Haier
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14. Boyuan’s Operations & Revenue Streams
5% Government
27% Industrial Projects
Projects
55% Commercial
13% Residential Projects
Projects
Based on 2010 Revenue
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15. FY2010 Project Backlog
Current Projects Location Revenue Net Income
New Jinhu International Jiangsu $7.18 $0.57
Phoenix Water City Sec A,C Sanya $13.14 $1.58
Pinghu Donghu Huayuan Zhejiang $1.69 $0.14
Misc. Projects Hangzhou $6.86 $0.55
Fuyue Grand Hotel Zhejiang $22.18 $2.66
Xinhui Rubber Corp. Zhejiang $5.86 $0.47
Xingcheng Silicon Corp. Zhejiang $4.39 $0.35
Barley Factory Zhejiang $12.57 $1.01
Residential Development Jiangxi $16.86 $1.35
Business School Zhejiang $5.00 $0.40
Qingshan Nuclear Plant Security Building Zhejiang $1.68 $0.13
Jiangsu Eco Farm Jiangsu $10.35 $0.83
Blue Star Commercial Building Shandong $14.60 $1.61
Pheonix Hotel Sanya $11.70 $1.34
Subtotal $134.06 $12.99
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16. Boyuan’s Competitive Advantages
1. Reputation for high quality projects
2. Track record of completing projects on time and
on budget
3. Class I General Contracting Qualification
• Projects up to 40-storeys
4. Experienced management team
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17. Boyuan’s Growth Strategies
1. Solidify our existing markets
2. Focus on projects with higher technical
elements to leverage on our technical
capabilities
3. Geographic expansion into other provinces in
China
4. Increase our scope of construction activities
with a special class qualification
5. Vertical integration in the long term
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18. Management and Directors
Zhejiang University of Technology graduate
Mr. Cai Liang Shou Senior Engineer with 22 years of real estate project management
- Founder and Chairman experience
Owns over 55% of Boyuan's share capital
Over 20 years experience in the accounting and finance industry
Mr. Paul Law Held senior positions at Citibank, National Australia Bank, and
- Chief Financial Officer Prudential Bache Securities (HK)
Graduate of McGill University and MBA (Finance) from UBC
Mr. Qian Feng Holds Senior Engineer designation.
- Vice General Manager More than 25 years of engineering, project execution and management
Ms. Ren Shu Received Masters degree in Law from Zhejiang University.
- Corporate Secretary Qualified as Lawyer since 2000
Mr. Wang Hao Graduated from Dongbei University of Finance and Economics
- Vice President Over 11 years of experience in financial practice and management
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19. Management and Directors
Founder, chairman and chief economist of VCChina Ltd.
Ms. Mannie Liu Holds doctorate degree in Economics from Cornell University, and is
currently professor at Renmin University in Beijing
- Independent Director Financial Advisor to the Beijing Municipal Government, Director of the
Boston China Finance Research Center in the U.S.
Professor of Law at the Zhejiang University.
Board member of the Zhejiang Real Estate Association, Legislative
Dr. Fang Lixin
Advisory of Hangzhou People’s Congress and the Hangzhou Municipal
- Independent Director People’s Government.
Holds a Doctoral degree from East Asia University of Politics and Law.
Principal of Sungai River Inc., an international financial consulting
company
Mr. Francis Leong
Serves as a Director on the boards of ENMAX and Grand Power
- Independent Director Logistics
Holds a BComm Degree and a Masters of Public Administration
Senior VP & CFO at Sino-Forest Corporation (TSX:TRE)
Mr. David J. Horsley Previously held position of Senior Vice President and CFO at Cygnal
- Independent Director Technologies Corporation and Senior Vice President and Corporate
Secretary at Canadian General Capital Limited
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20. Capital Structure
Boyuan Construction Group, Inc
Capital Structure
• Boyuan has a face value of
$7,930,500 in Convertible Common Shares 13,749,178
Debentures outstanding, Preferred Shares* 11,990,072
convertible into 3,965,250
Common Shares @ $2.00/Share
Shares O/S (Basic) 25,739,250
• Boyuan’s Warrants are Debenture Shares 3,965,250
exercisable at $2.00/Share for a Warrants 3,172,200
period of four years
Options 140,000
Shares O/S (Diluted) 33,016,700
* Boyuan Preferred Shares rank equally with the Common Shares and are convertible into Common Shares on a 1:1 basis, subject to TSX approval
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21. Market Facts
Ticker Symbol: BOY-V
Listing: TSX-Venture
Recent Share Price*: $3.10
Shares Outstanding ~ 25.74 million
Market Capitalization $79.79M
52-Week Price Range $1.25 - $3.4
Fiscal Year-End June 30
* At December 31 Market Close
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22. Contacts
Company Contacts
Paul Law Ms. Ren Shu
Chief Financial Officer Corporate Secretary
paullaw@zjboyuan.com.cn renshu@zjboyuan.com.cn
Tel: +852 9329 5088 Tel: +86573-85583126
Investor Relations
Joe Racanelli
Senior Account Executive
The Equicom Group Inc. TSX-V:BOY | BOY.DB
jracanelli@equicomgroup.com
Tel: 416 815-0700 x 243
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23. Appendix
January, 2010
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24. Residential Projects
Pinghu Xingzhou, Donghu Park
• Three phases with 13, 16 and 12 buildings in each phase
• Total construction area of 750,000 sq feet
• Currently building the third
Phase of 12 buildings
• September 2009 targeted
completion
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25. Industrial Projects
Cargill Corporation’s High-fructose factory
for Coca-Cola
• Cargill is the largest private company in the U.S.
• Project included roadways, warehouses and
offices
• Phase #1 has total area of
55,000 sq feet
• Completed in August 2008
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26. Commercial/Mixed Use Projects
Jinhu International Plaza
• High-end residential and office buildings in Nanjing, capital of
Jiangsu province
• 28-story residential building
21-story office building
• Total construction area is
670,000 sq feet
• December 2009 completion
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27. Public Infrastructure Projects
Hangzhou Municipal School for the Chinese
Communist Party Committee
• 7-storey building
• Total construction area of 464,570 sq feet
• Student apartment complex
• High profile building for the
CCP Committee in Hangzhou,
capital of Zhejiang Province
• Completed in August 2008
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28. Hotel Projects
• Fuyue Grand Hotel
• A 5-star hotel in Jiaxing,
Zhejiang
• 20-storey with a gross
construction area of 1
million square feet
• Due to complete in
2010

29. Commercial Projects
• Blue Star Commercial
Building
• Located at the city of
Weifang, Shandong
• 19-story with a gross
construction area of
300,000 square feet
• Due to complete by
2011